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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






2. Ed < 1






3. A firm that has market power in the factor market (a wage-setter)






4. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






5. ATC = TC/Q = AFC + AVC






6. Es = (%dQs) / (%dPrice)






7. Models where firms agree to mutually improve their situation






8. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






9. The change in quantity demanded resulting from a change in the price of one good relative to other goods






10. Ed = 8 - infinite change in demand to price change






11. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






12. Costs that change with the level of output. If output is zero - so are TVCs.






13. Ei = (%dQd good X)/(%d Income)






14. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






15. Entry of new firms shifts the cost curves for all firms downward






16. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






17. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






18. Exists at the point where the quantity supplied equals the quantity demanded






19. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






20. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






21. Occurs when LRAC is constant over a variety of plant sizes






22. The additional benefit received from the consumption of the next unit of a good or service






23. The additional cost incurred from the consumption of the next unit of a good or a service






24. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






25. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






26. Entry (or exit) of firms does not shift the cost curves of firms in the industry






27. The output where ATC is minimized and economic profit is zero






28. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






29. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






30. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






31. Total product divided by labor employed. APL = TPL/L






32. Exists if a producer can produce a good at lower opportunity cost than all other producers






33. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






34. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






35. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






36. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






37. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






38. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






39. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






40. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






41. The marginal utility from consumption of more and more of that item falls over time






42. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






43. Product demand - productivity - prices of other resources - and complementary resources






44. The rational decision maker chooses an action if MB = MC






45. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






46. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






47. A good for which higher income increases demand






48. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






49. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






50. Ei > 1